terday, the FDIC issued additional guidance on the payment of severance by "troubled insured depository institutions and covered companies." Under the applicable regulations, an entity is defined as “troubled” if it has a composite rating of four or five, or meets other defined criteria. (Note that the guidance refers to "golden parachute payments" but includes virtually all severance payments within that definition (12 C.F.R. 359.1).)

The bottom line is that the new guidance prohibits a troubled institution from making, or agreeing to make, any severance payments unless the payments fall within one of the three permissible payments that a troubled entity may make – and even then, the institution must receive prior supervisory approval to make the payments. The guidance notes that the FDIC is unlikely to approve severance payments for institutions that are in a "precarious financial position," unless the institution can demonstrate near-term benefits that outweigh the cost of the payments and the payment is otherwise not contrary to the intent of the severance restrictions.

Finally, the regulations permit a de minimis payment of up to $5,000 per individual without official approval.

For your sake, I hope you are not a troubled institution or in a "precarious financial position," but if you are, things just got tougher for you.